A survey on the market in November 2019 showed that, except for the four major banks, Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Vietnam Bank for Agriculture and Rural Development (Agribank), the deposit rates were almost unchanged, most other banks had an increase adjustment.
With a 13-month term, the highest savings interest rate of 9.4 percent per annum belonged to SaigonHanoi Joint Stock Commercial Bank (SHB) for deposits of over 500 billion dong of 13-month terms. Next was Saigon Commercial Joint Stock Bank (SCB) and Viet Capital Commercial Joint Stock Bank (Viet Capital Bank), which applied the highest interest rates of 8.76 percent per year and 8.7 percent per year with deposits from 10 billion dong and above. For other joint-stock commercial banks, 13-month term interest rates ranged from 7.8 percent to 8.5 percent per year.
With a six-month term, the highest interest rate was 8.45 percent per year, belonging to Tien Phong Commercial Joint Stock Bank (TPBank). Other banks like SCB applied the interest rate of 8.21 percent per year, SHB of 8.2 percent per year, and National Citizen Commercial Joint Stock Bank (NCB) of eight percent per year. The 12-month term with the highest interest rate also belonged to SHB with 9.2 percent per year for customers depositing more or less than 500 billion dong, while SCB was 8.66 percent per year. Other banks such as NCB, TP Bank and VietcapitalBank were 8.2 percent per year.
Notably, some banks turned to issue certificates of deposit with extremely high interest rates. Recently, many customers often received calls from some banks, offering to buy certificates of high interest rate deposits. Accordingly, the minimum value for individual customers was 10 million dong when they deposited for 24-months, with the interest rate of 9.5 percent per year; 36-months interest rate was 9.8 percent per year; 48-months interest rate was 10 percent per year; 60-months interest rate was 10.2 percent per year.
Also, many banks had promotions to add more interest rates for customers. The bigger the deposit, the more interest customers could get
Le Hong Quyen, resident at Vu Tong Phan Street, Thanh Xuan District, Hanoi, said that the amount of 5 billion dong had just been sent for a six-month term at a commercial bank with a transaction office near her house, with an interest rate of eight percent per year plus two percent per year if her received both principal and interest at the end of the period. With the above amount, calculated after six months of sending, she would earn a profit of over 200 million dong.
According to Quyen, with the amount of less than 10 billion dong to deposit for six or nine-month terms were currently the most reasonable. The interest rate of some banks was nearly as high as the 12-3-month term with the faster maturity date. In the meantime, having the idle cash not to know what to do, the savings deposit was the best, Quyen concluded.
Not only individuals but even businesses with cash in banks also benefited greatly, because deposit rates rose. Financial statements of some companies showed that large amounts of money were deposited in banks, collecting ‘huge profits.’
For example, the Vietnam Engine and Agricultural Machinery Corporation (VEAM) had more than 10 trillion dong deposited in banks, helping to earn hundreds of billions of financial revenue every quarter in the first half of 2019. Saigon Alcohol Beer and Beverages Corporation (Sabeco), with cash deposits to the bank to get interest of more than 14.7 trillion dong. With this amount, in the first nine months of 2019, Sabeco recorded fiscal revenue of 622 billion dong, up to 36 percent over the same period last year.
Have interest rates increased?
According to economic experts, by the end of the year, the demand for money of people increased. Many people need to repair their houses, pay their debts, buy vehicles and household appliances to prepare for Tet Holiday. Therefore, no idle money deposited in the bank, to withdraw deposits, people even borrowed from the bank to spend.
Besides, the stock market was increasing. The VN Index had risen by 12 percent in the first 10 months of 2019, many stocks gained, many people had invested money to buy securities in the hope of higher benefits, so the money flowing into banks was also affected. Along with that, last time, a series of large enterprises issued bonds with interest rates higher than 10 percent per year, making large amounts of money also attracted. Therefore, the capital mobilisation activities of banks had been influenced.
From October 28 to November 1, the State Bank of Vietnam (SBV) had to net inject 19.999 trillion dong via the open market to help improve banking system liquidity.
The demand for credit financing in the peak quarter of the end of the year, as well as the capital structure requirements in effect from the beginning of 2020, would also cause commercial banks to push up capital mobilisation. Therefore, deposit rates might still be adjusted to increase in some banks.
The deposit interest rate race was still aggressive, making the expectation of lowering lending rates even further. A company specialising in importing confectionery from Indonesia to supply to supermarkets in Hanoi said it had to borrow from a bank with a six-month term of 10 percent per year. However, this interest rate was only for the first three months. The next three months would be adjusted at the base rate plus the margin of two percent to three percent per year more, depending on each customer, calculated about 11 percent per year.
Thus, the average six-month loan interest was about 10.5%, 1.3 percent higher than the first half of 2019. Rising interest rates caused the costs of businesses to increase. All would be charged to the product price. Therefore, the average price of imported products of this business grew by more than one percent compared to the first half.
With interest rates for long terms of 12 months or more, the bank was lending at 12.5 percent per year for production and business. However, this interest rate was for the first term, then it would be floating and the amplitude of about 3.5 percent to four percent per year.
A small mining enterprise in Thai Nguyen said that according to the calculation, the loan interest rate at six percent was appropriate. With interest rates on long-term loans above 12%, the investment would suffer losses, so many banks in the area offered loans, but they did not dare to borrow.
A recent survey of Vietnam Report Joint Stock Company showed that high interest rate was one of five challenges affecting production and business activities in 2019. From the beginning of 2019 to recent days, banks were continually raising deposit rates, leading to high lending rates, and higher operating costs, increased product prices, affecting sales and profits of many businesses.
